By Christopher Hall, owner of Mortgage Advice Bureau in Norwich
Despite the dramatic headlines throughout 2009, deals are still available for most people and those looking to move house should not be discouraged from seeking expert advice. Yes, the market has changed radically. Twelve months ago there were 12,000 products out there. Now there are less than a quarter as many. Most notably it is now almost impossible to get 100 per cent mortgages – and 95 per cent are more difficult to source. But there are still mortgages available for those who have a deposit. New mortgage products and criteria had removed some buyers from the market – but this situation should benefit those with deposits and sufficient equity. This is because lower demand for property has pushed prices down, allowing capable buyers now to purchase at bargain levels, although evidence and the media are now showing small gains. The media continue to report that mortgage approvals have reached an all-time low but this is not surprising at all. Fewer people have been buying houses so fewer mortgages were required. When house sales pick up again so will the uptake of mortgages.
Q: What exactly is happening with mortgages at the moment?
A: In simple terms the financial markets in which banks happily lent funds to other banks have effectively stalled. For borrowers in the UK, the net effect has been a reduction in the number of mortgage products available.
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In addition, lenders have become more cautious in terms of who and to what degree they are prepared to lend.
Q: So does that make it impossible to borrow at the moment?
A: No, not at all. It is important not to be put off by the negative news on the television and radio. There is still a market out there. The most important thing is to get expert advice. The market is changing so quickly that now more than ever is the time to seek out a truly independent mortgage broker. He or she will be able to fully determine your circumstances, and in the majority of cases will be able to find a suitable source of funds at the most competitive rates to meet individual needs.
Q: But are independent mortgage advisers truly independent?
A: Yes. Advisers at Mortgage Advice Bureau, for example, are able to look at the entire market to help you to find the most appropriate product. More than two thirds of mortgages arranged in the UK are conducted by brokers and many of those products are only available via the broker route. Mortgage advisers tied to banks or building societies will just consider their own deals.
Q: But the news reports say the cost of mortgages is now so much greater than it was this time last year…
A: Again, these stories do not really reflect the entire market and the different deals available to different clients. It is true that those who are still able to borrow are finding that the rates of interest now on offer are often higher than they were 12 months ago. But again, an independent adviser can help you to find the best of what is available. If bank base rates continue to go down then many, including the government, believe mortgage rates should also fall.
Q: What would you say to people who are not sure whether they should move or stay put?
A: Firstly, take advice from your local estate agent about the market situation in your area. An agent should be able to give you a true picture of how easy it will be to sell and buy. Then take advice from an independent mortgage adviser. When you find your ideal next home, an adviser should be able to help you find a mortgage. The market may have changed but there should be something available to most people.
Q: What do you think will happen long-term?
A: It’s hard to say. There will always be people who have to move house and once vendors understand that prices have softened, the market should start to move again. I hope the current situation with mortgages is short-term. The Bank of England intervention was intended to encourage inter-bank lending again and to help the markets return to a greater degree of normality. Individuals need to make the decision that is right for them – but I would certainly suggest they do that after seeking independent advice from the experts.
You can contact Chris Hall on 01603 867 254 or visit www.mortgageadvicebureau/norwich